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  • Mon, Mar 29 2010
  • 7:09 PM » Apartment REITs Scout for Deals on Busted Condos
    Published Mon, Mar 29 2010 7:09 PM by Google News
    Apartment operators are scooping up failed condo projects, looking for bargain-priced remnants of the housing boom. It’s an ideal salvation for troubled projects: Companies can boost their rental income without incurring the steep costs-and the uncertainty-of a multi-year development. In a deal that should close next month, Equity Residential is buying a 550-unit development in Washington, D . C . , out of a bankruptcy proceeding. The reported $167 million price tag is well below the replacement cost. Essex Property Trust recently said it was buying two Orange County, Calif., developments for a combined $155 million, about 55% of the original construction costs, according to Green Street Advisors, a real-estate research firm. Industry watchers expect more announcements as private developers stung by the downturn and a lack of financing continue abandoning properties. Chicago-based Equity Residential said it couldn’t discuss the transaction, citing confidentiality restrictions. Still, the sector giant seems confident. It is already advertising the development, , on its Web site, though the move-in date is unclear. It is betting tenants will pay a premium rent for higher-end amenities including built-in bookshelves and a rooftop pool: A studio is being marketed for $1,785, while a two-bedroom is going for $3,685. That’s above the average rental rate for units within a mile radius: Studios average $1,517, while two-bedrooms go for $3,068, according to Axiometrics, an apartment data research firm. Even so, “I don’t think they’ll have an issue leasing it up,” said Alexander Goldfarb, a REIT analyst with Sandler O’Neill + Partners. “One of the beauties of apartments is you can always cut the rent. Even if you do a month free, you’re still looking a decent return for the current environment.” In California, Essex recently the acquisitions of the 115-unit DuPont Lofts in Irvine and the 349-unit at MacArthur Place in Santa Ana. The prices were reported at $27 million and $128...
  • 7:09 PM » Seller as Lender
    Published Mon, Mar 29 2010 7:09 PM by
    As lending conditions have tightened drastically and the housing market has softened, seller financing is emerging as an option for both parties.
    Click Here to Read the Full Article

  • 4:02 PM » Residential Investment Stalled
    Published Mon, Mar 29 2010 4:02 PM by Calculated Risk Blog
    The BEA released an update to the underlying detail tables for Q4 today. The following graph uses the updated data for Residential Investment through Q4, and an estimate for Q1 based on housing data through February (a 10% annualized decline in residential investment). Note: Residential Investment includes new single family structures, new multi-family structures, home improvement, brokers' commissions on sale of structures and a few minor categories. Click on graph for large image. This graph shows total Residential Investment, and single-family structures, both as a percent of GDP. Residential investment (RI) is one of the best leading indicators for the economy. Usually RI as percent of GDP is declining before a recession, and climbs sharply coming out of a recession. Note: The 2001 recession was a business led recession. Some readers will notice the sharp decline in 1966 and wonder why the economy didn't slide into a recession - the answer is the rapid build-up for the Vietnam war kept the economy out of recession (not the best antidote). But this time RI is moving sideways. This time is different. The reason RI is moving sideways is because of the huge overhang of existing housing units (both single family and rental units). And this is one of the key reasons I think the current recovery will be sluggish and choppy - and that unemployment will stay elevated for some time. Stated simply: One of the usual engines of recovery - residential investment - isn't contributing this time.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:47 PM » HVCC Impacting Appraisals? Say It Isn’t So
    Published Mon, Mar 29 2010 3:47 PM by Google News
    GUEST AUTHOR: Micheal W. Armentrout, VP AM Appraisals, Inc. Mike has been involved in full time real estate valuation since early 1992 and has experience in numerous Central Ohio markets. He served as a staff appraiser at several local firms...
  • 3:47 PM » New CRE Limits Could Jeopardize Housing and Economic Recovery
    Published Mon, Mar 29 2010 3:47 PM by NAHB
    Press Release
  • 3:47 PM » Top Questions Home Buyers Have About the Tax Credit
    Published Mon, Mar 29 2010 3:47 PM by NAHB
    Press Release
  • 1:27 PM » Will ARMs Still Sink High-Cost Housing Markets?
    Published Mon, Mar 29 2010 1:27 PM by Google News
    Getty Images Loan-modification programs, such as this one in California, have helped to limit the number of mortgages whose payments will rise this year. Today’s at how the problems that many housing analysts have long feared about the potential shocks from option adjustable-rate mortgages may not come to pass—in no small part because many of these loans have already defaulted. Option ARMs allowed borrowers to make minimal payments initially that led loan balances to grow. Loans “recast” and begin requiring full payments on the larger balances, usually five years after origination or when the balance hits a pre-set ceiling. For years, analysts have worried about housing aftershocks from a wave of loans, originated from 2005-07, that would being jumping to sharply higher payments this year. But “recasts are now a non-issue,” says Ramsey Su, a San Diego investor and former real-estate broker specializing in foreclosed properties. “What people said was going to happen this April, it already happened over the last six months,” says Mr. Su. In other words, option ARMs have performed so badly (their delinquency numbers rival those of subprime loans) that many expected recasts won’t matter. Banks have also tried to aggressively modify some borrowers out of option ARMs with big payment shocks. There’s almost half as many active option ARMs today as there were in March 2006, when originations peaked at 1.05 million. Meanwhile, almost one-third of the active loans are already delinquent, according to First American CoreLogic. Mr. Su says that there may be some borrowers who “procrastinated” and will be forced to default when their payments adjust higher, but that the housing market’s woes have been overwhelmed by much bigger problems, such as the 11 million Americans who owe more than their homes are worth. Because they required little money down and minimal monthly payments, option ARMs appealed to investors and other low cash-flow borrowers who essentially made a “put” on home...
  • 1:27 PM » Mortgage Debt: Modifying the Mods
    Published Mon, Mar 29 2010 1:27 PM by Seeking Alpha
    submits: Friday’s announcement that the administration is overhauling its mortgage modification program to encourage principal forgiveness shows they understand that unless folks have equity in their homes, mortgage defaults will continue in huge numbers. The plan is a decent one, and it appropriately would have lenders absorb the lion’s share of losses. Still, its an all-carrots approach that may be tough to get off the ground. And taxpayers would get even more deeply involved in housing finance. If it doesn’t work, regulators have a stick to force lenders to take losses, which I describe at the end.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:52 AM » 3/29/10--Activity, MBIA, Maine Tax Initiative
    Published Mon, Mar 29 2010 10:52 AM by
    *If you are planning on getting something done this week I would suggest you do it earlier rather than later, as holidays, quarter end, and Japanese year-end will all combine to challenge liquidity and motivation. A number of customers spent the end of last week combing through remit. reports with the disclaimer that the latest efforts out of D.C. as well as Bank of America to push principal forgiveness at this point at the least are raising questions and could be a game changer. We continue to see most of the selling come out of money managers, with a smattering of hedge fund activity primarily booking profits, but I wouldn’t necessarily say taking chips off the table.
    Click Here to Read the Full Article

  • 8:33 AM » What Real Estate Agents Need to Know About Property Management
    Published Mon, Mar 29 2010 8:33 AM by Google News
    Upon first examination, real estate agents and property managers would seem to be ideally suited to moving between each others worlds. Both professions are dedicated to helping people find a place to live. Both require intimate knowledge of local neighborhoods, local property laws and local trends. And as we've seen in the last three years, both professions are very much at the mercy of a volatile United States housing market.
  • 8:21 AM » A Good Time to Buy? Yes, But No Need to Rush
    Published Mon, Mar 29 2010 8:21 AM by Google News
    Today’s at the high-end housing market reveals how more sellers are beginning to get more realistic about home prices and cut deals on million-dollar homes. Many housing economists say that for borrowers who can get a mortgage and who have stable incomes, pulling the trigger on a house they like makes a lot of sense right now. (Of course, they also note that the days of buying high-end properties as high-yield investments are history, at least for the time being). But while there are certainly opportunities at the high end, buyers shouldn’t feel a need to rush because the market is still oversupplied. And those who do make purchases need to be realistic about the potential for some future price declines. “There’s still going to be more pressure on this market for the next couple of years,” says T.J. Culbertson, a real-estate agent in Beverly Hills, Calif. On the other hand, as mortgage rates are low for those who can get financing. “If you’re waiting because you think the price might get better, well, the mortgage rate could go in the wrong direction,” says John Burns, a real-estate consultant based in Irvine, Calif. He says it could be a good time to buy generally speaking in markets where values have returned to 2003 levels. While some borrowers are worried that they’ll buy a new house only to see it decline in value, that’s a much bigger concern primarily for first-time buyers. Those who already have homes could also see the price of their current home fall in value. The high end of the housing market didn’t see nearly the same spectacular appreciation as the bottom of the market, which has dropped much more sharply and is now showing signs of stabilization. In San Francisco, prices on homes for the bottom third of the market (currently homes under $325,000) have fallen 57% from the peak, returning to levels last seen 10 years ago, while for the top third of the market (currently more than $600,000), prices are down 23% to 2004 levels, according to the Standard &...
  • 8:20 AM » Regulation Fuels Office-Space Demand
    Published Mon, Mar 29 2010 8:20 AM by Google News
    Controversy abounds over government regulation of the financial markets and health care, but the nation’s landlords are sure to be happy with one side effect: An uptick in demand for office space as the federal government amps up hiring in the nation’s capital and elsewhere around the country, says Jones Lang LaSalle in a report released Friday. The federal government is looking for over 4 million square feet of available space across the nation to meet staffing needs, particularly in the D.C. metropolitan area, the report said, noting that a new era of government regulation is looming in the wake of the country’s financial and economic crisis. The report cited the Securities and Exchange Commission, the Commodity Futures Trading Commission and Federal Deposit Insurance Company as agencies expected to significantly expand. “The demand is predicated on job growth,” said Scott Homa, Jones Lang LaSalle’s research manager. He added that the federal government generated 9,600 jobs in the past 12 months mostly from regulatory agencies. “That growth is going to be exhibited primarily into expansion of existing (office buildings),” he said. He estimates that in the first quarter the federal government leased about 750,000 square feet of office space in Washington alone. “No other market in the country can point to that level of demand.” The government is also benefiting from pretty good prices. The D.C. region including Northern Virginia and suburban Maryland is battling record high vacancy rates of about 16% along with an oversupply of office buildings that were the product of speculative construction. As a result, rents are expected to remain relatively low for some time. “I would say that despite this growth and federal demand the excess supply that we have in the market is not going to lead to any material increase in rental rates,” said Mr. Homa. “Frankly, there are several years worth of supply that is built into the market right now,” he said. Federal demand in 2010 is...
  • 8:19 AM » Aargh! Beware of reporting on the March Employment Report
    Published Mon, Mar 29 2010 8:19 AM by Calculated Risk Blog
    I read this from Bloomberg this morning: Employers in the U.S. probably added jobs in March for the second time in more than two years, setting the stage for a broadening of the expansion, economists said before a report this week. Payrolls probably rose by 190,000, the most in three years, after declining 36,000 in February, according to the median forecast of 62 economists surveyed by Bloomberg News before the Labor Department’s April 2 report. Aargh. As I noted earlier this month in , a headline number of 200,000 net payroll jobs might be considered weak! The March report will be distorted by two factors: 1) any bounce back from the snow storms in February, and 2) the decennial Census hiring that picked up sharply in March. These are real payroll jobs, but the Census hiring is temporary - and the Census jobs that are added in March, April and May will all be lost over the following 6+ months. What we are interested in is the underlying trend of payroll job growth. To find that number we need to adjust for the Census jobs (although they are reported NSA), and we also need to adjust for the February snow storms. Later this year we will need to add the Census jobs back to find the trend. The important point is 190,000 is probably a weak number for March - and probably not "setting the stage for a broadening of the expansion" - although we need to see the details.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:17 AM » Morning HAMP
    Published Mon, Mar 29 2010 8:17 AM by Calculated Risk Blog
    Two articles and a favorable reaction from Laurie Goodman at Amherst ... From Renae Merle at the WaPo: The Obama administration is about to ramp up its efforts to tackle second mortgages as part of an aggressive program announced by the White House on Friday to address foreclosures. ... Government officials have estimated that about 50 percent of troubled borrowers have a second mortgage. But a year after federal officials launched an initial program to lower payments on these second loans, not a single homeowner has been helped. ... Just a few banks hold most of the second liens, according to data from Inside Mortgage Finance. Of the more than $840 billion in home-equity lines and piggyback loans outstanding, Bank of America has about $147 billion of them, while Wells Fargo and J.P. Morgan Chase have $124 billion and $118 billion of the market, respectively. Citigroup has about $53 billion of these loans on its books. They have all signed up for the administration program announced last year, but none has taken action yet. Note: Merle is referring to the HAMP to modify 2nd liens - and that program was updated yesterday too. From David Streitfeld at the NY Times: The new measures ... are aimed not only at the seven million households that are behind on their mortgages but, in a significant expansion of aid that proved immediately controversial, the 11 million that simply owe more on their homes than they are worth. ... The latest programs, together with foreclosure assistance efforts already in place, are aimed at helping as many as four million embattled owners keep their houses. But the measures, which will take as long as six months to put into practice, might easily fall victim to some of the conflicting interests that have bedeviled efforts to date. None of these programs have the force of law, and lenders have often seen no good reason to participate. To lubricate its efforts, the government plans to spread taxpayers’ money around liberally. ... All told, the new...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:17 AM » Misunderstanding the Last Financial Crisis
    Published Mon, Mar 29 2010 8:17 AM by The Big Picture
    I wanted to address a glaring error in a David Leonhardt NYT Sunday Magazine article, titled , In the column, Leonhardt wrote: “But there was a fatal flaw in the new system. The banks’ new competitors received scant oversight. They were not directly bound by Roosevelt’s restrictions. “We had this entire system of outside banks that had no meaningful constraints on capital and leverage,” Geithner says. Investment banks like Lehman Brothers were able to make big profits in part by leveraging themselves more than traditional banks. To use the down-payment analogy again, it was as if Lehman were allowed to put down only 3 percent of a house’s purchase price while traditional banks were still making larger down payments. When the house’s value then rose by just 3 percent, Lehman doubled its investment. A.I.G., similarly, created a highly leveraged derivatives business that regulators essentially ignored… The deregulation of the last few decades has come in for a lot of blame for the current financial crisis. It deserves some blame, too. If Citigroup and Bank of America were still operating under the New Deal rules, they might not have flirted with bankruptcy. But take a minute to think about which firms had the biggest problems. They were the shadow banks: stand-alone investment banks like Lehman, Bear Stearns and Merrill Lynch; and other firms, like A.I.G., that were not banks at all. They were never fully covered by the New Deal regulation, and they were not the ones most affected by the deregulation .” (emphasis added). This is not precisely right. And as applied to AIG, it is absolutely, totally wrong. Thanks to the The Commodity Futures Modernization Act of 2000 (CFMA), the universe of structured derivatives were completely exempt from ALL regulation. Whether it was Collateralized Debt Obligations (CDOs) or Credit Default Swaps (CDSs), the CFMA put them into the world of shadow banking. How? The CFMA mandated it . No supervision was allowed, no reserve requirements for...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:17 AM » FDIC Bank Failures
    Published Mon, Mar 29 2010 8:17 AM by The Big Picture
    The fun never stops: >
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:17 AM » Mortgage-banking veteran Bott leads FHA foreclosure-prevention effort
    Published Mon, Mar 29 2010 8:17 AM by Washington Post
    Vicki Bott hastily uprooted her husband, their three children, two dogs and a motor home from Austin to join the Federal Housing Administration six months ago and helped unveil the Obama administration's plan to revamp its faltering foreclosure-prevention efforts last week.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:17 AM » Female Suicide Bombers Kill 37 in Moscow Metro
    Published Mon, Mar 29 2010 8:17 AM by CNBC
    Female Suicide Bombers Kill 37 in Moscow Metro
  • 8:17 AM » Principal Forgiveness:  And Now We All Pay
    Published Mon, Mar 29 2010 8:17 AM by CNBC
    The government is officially giving borrowers back home equity. Yep, somewhere between $35 and $50 billion worth. Of course we've all lost over $5 trillion, but who's counting? Lenders still aren't required to do it, but they're going to get an awful lot of taxpayer-funded incentives to do it.
  • Fri, Mar 26 2010
  • 5:35 PM » New Wave of Mortgage Defaults on the Horizon?
    Published Fri, Mar 26 2010 5:35 PM by Seeking Alpha
    submits: I have been working with a young couple for a year now. They have been up against it. They look pretty typical. They bought an apartment with a first mortgage and low down payment. Then they made improvements with a HELOC. He lost his good job and now works for less. She works long hours and they have a kid. They are underwater on the 1st mortgage so the HELOC is worthless. Their monthly cash flow including debt service has been negative for a long time. They have been paying the mortgage(s) by drawing down more on the HELOC.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 5:34 PM » Why Strategic Defaults Are on the Rise
    Published Fri, Mar 26 2010 5:34 PM by Seeking Alpha
    submits: How widespread are? Laurie Goodman and her team at Amherst Mortgage Insight yesterday released a report that shows they are indeed on the rise and for reasons we might suspect: negative equity and a more borrower-friendly environment. The second reason should be kept in mind as we consider President Obama’s to encourage principal reduction. If the plan is structured so that it gives incentives to default in order to secure principal forgiveness, well, expect defaults to spike.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 5:34 PM » Difficult Choices Ahead for Europe's Policymakers
    Published Fri, Mar 26 2010 5:34 PM by IMF
    The IMF's Managing Director Dominique Strauss-Kahn returns to Europe this week to visit Poland and Romania, as the world economy emerges from the crisis and the European Union is faced with a host of new challenges.
  • 5:34 PM » Processor and Underwriter Licensing Requirements Under HUD’s S.A.F.E. Act
    Published Fri, Mar 26 2010 5:34 PM by
    Written By: Stacey Sprain, Certified Ambassador Loan Processor (CALP) I’ve noticed a few recent questions and comments listed in chat rooms and blogs in regards to confusion and questions on HUD’s S.A.F.E. Act licensing requirements as they relate to the capacity of loan processors and underwriters. Because of my own curiosity, I’ve “dug in” and started doing a little reading up on the topic and here is the information I’ve found that may provide answers to the licensing question- “required to be licensed or not required to be licensed.” What exactly is the S.A.F.E. Act? According to HUD’s explanation, the SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators and for the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry for the residential mortgage industry for the purpose of achieving the following objectives: (1) Providing uniform license applications and reporting requirements for state licensed-loan originators; (2) Providing a comprehensive licensing and supervisory database; (3) Aggregating and improving the flow of information to and between regulators; (4) Providing increased accountability and tracking of loan originators; (5) Streamlining the licensing process and reducing regulatory burden; (6) Enhancing consumer protections and supporting anti-fraud measures; (7) Providing consumers with easily accessible information, offered at no charge, utilizing electronic media, including the Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators; (8) Establishing a means by which residential mortgage loan originators would, to the greatest extent possible, be required to act in the best interests of the...
    Click Here to Read the Full Article

  • 5:19 PM » Treasury, Ahem, Clarifies Goals for the Mortgage Mod Program
    Published Fri, Mar 26 2010 5:19 PM by
    by , ProPublica - March 25, 2010 11:55 am EDT How many struggling homeowners will get a mortgage modification through the government’s $75 billion program? It would seem to be a simple question. But for the past year, the administration has been saying one thing, and observers have been hearing another. What the administration has been is that the program “will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments.” Sounds like the Treasury Department is aiming to get 3 million to 4 million modifications, right? Actually, Treasury’s real goal is between 1.5 million and 2 million permanent modifications, according to .
    Click Here to Read the Full Article

  • 2:28 PM » Unemployment Rate Increases in 27 States in February
    Published Fri, Mar 26 2010 2:28 PM by Calculated Risk Blog
    From the BLS: Twenty-seven states recorded over-the-month unemployment rate increases , 7 states and the District of Columbia registered rate decreases, and 16 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Over the year, jobless rates increased in 46 states and the District of Columbia and declined in 4 states. ... Michigan again recorded the highest unemployment rate among the states, 14.1 percent in February. The states with the next highest rates were Nevada, 13.2 percent; Rhode Island, 12.7 percent; California and South Carolina, 12.5 percent each; and Florida, 12.2 percent. North Dakota continued to register the lowest jobless rate, 4.1 percent in February, followed by Nebraska and South Dakota, 4.8 percent each. The rates in Florida and Nevada set new series highs, as did the rates in two other states: Georgia (10.5 percent) and North Carolina (11.2 percent). emphasis added Click on graph for larger image in new window. This graph shows the high and low unemployment rates for each state (and D.C.) since 1976. The red bar is the current unemployment rate (sorted by the current unemployment rate). Fifteen states and D.C. now have double digit unemployment rates. New Jersey and Indiana are close. Four states and set new series record highs: Florida, Nevada, Georgia and North Carolina. Three other states tied series record highs: California, Rhode Island and South Carolina.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 2:28 PM » Q&A: Philly Fed’s Plosser Open to Sales of Fed’s MBS
    Published Fri, Mar 26 2010 2:28 PM by WSJ
    Philadelphia Fed President Charles Plosser (Bloomberg News) The Federal Reserve should be open to selling some of its portfolio of mortgage backed securities even before it starts raising interest rates, says Charles Plosser , president of the Federal Reserve Bank of Philadelphia . In an interview with the Wall Street Journal in Frankfurt at the tail end of a trip to Europe, Mr. Plosser said he’s comfortable with inflation in the near term, but thinks the Fed should reduce its balance sheet to prevent future price pressures. Mr. Plosser thinks the U.S. will soon be generating jobs, which may help spur an end to the Fed’s use of the “extended period” language in its policy statements. Following are excerpts from the interview: What’s your view of fiscal policy and the state of recoveries in the US and Europe? Plosser: I’m anticipating positive [U.S.] employment growth in the next month or two. The March report may show positive growth as well. The evidence in the U.S. about the sustainability of [the recovery] is growing in the sense that it’s becoming more broad-based. We’re seeing positive signs in more and more pieces of the economy. I’m hoping that as we become more and more convinced over the next quarters that economic growth is on a good trajectory, we’re going to have to start looking hard at beginning to rein in our accommodative policies because it’s extraordinarily low. Even if we raise the funds rate target to 75 basis points, it’s still extraordinarily low. Like the U.S., I think there’s evidence Europe is gradually emerging from this recession. It seems to be a little more tentative at this point than in the United States. I think the data, particularly from Germany, there’s some disappointment in the last few months. But I get the sense they continue to be on a track for recovery. In terms of fiscal policies, certainly many countries around the world, the US included, have engaged in fiscal policies that are quite extraordinary in terms of their size, and...
  • 2:28 PM » HUD Releases Groundbreaking Study on Costs of First-Time Homelessness for Individuals and Families
    Published Fri, Mar 26 2010 2:28 PM by HUD
    WASHINGTON - When an individual or a family becomes homeless for the first time, the cost of providing them housing and services can vary widely, from $581 a month for an individual's stay in an emergency shelter in Des Moines, Iowa to as much as $3,530 for a family's monthly stay in emergency shelter in Washington, D.C. The U.S. Department of Housing and Urban Development today released three studies on the cost of 'first-time' homelessness; life after transitional housing for homeless families; and strategies for improving access to mainstream benefits programs.
  • 2:28 PM » 3/26/10--FGIC, New Mod Inititiative, Ambac
    Published Fri, Mar 26 2010 2:28 PM by
    Wow…there is a tremendous amount of news hitting the tape, in particular when it comes to mono-lines as well as mortgage modifications…. *Late yesterday FGIC announced today that it is launching a Syncora-like tender offer for $9.6 billion (119 different classes) of its wrapped RMBS and ABS and is entering into a settlement with its CDS counterparties in which it creates a new Drop Down Co that will assume all of FGIC's obligations under initially $9.5 billion notional of CDS. FGIC will capitalize Drop Down Co in an amount equal to 1.5% of the par amount of CDS commuted.
    Click Here to Read the Full Article

  • 11:37 AM » Will White House Plan Rile Up More Borrowers Than It Helps?
    Published Fri, Mar 26 2010 11:37 AM by Google News
    The White House announced a raft of enhancements to its foreclosure mitigation efforts on Friday morning, as we reported in . Every new program announcement will raise hopes for some and the anger of others, but the bottom line is that these adjustments, which include renewed attention towards reducing loan balances, are designed to address the fact that the foreclosure crisis has deteriorated as unemployment rises and more borrowers owe more than their homes are worth. The administration is going to double the amount of money it will pay for banks to extinguish second mortgages, which comes on the heels of announcing that all four big banks have now signed up for the second-lien program. That’s designed to help clear a that has stymied modifications and short sales, where a lender allows a home to be sold for less than the amount owed. The most interesting part of the plan is a decision by the administration to give the Federal Housing Administration a much more prominent role in trying to help borrowers who are current on their loans but who are underwater. The program will try to let more borrowers who owe more than their homes are worth reduce their loan balances by refinancing into FHA-backed loans. The idea is a bit like a short sale, except in this case, there’s no sale. Instead it’s a “short refinance.” Investors can trade in the future risk of a foreclosure (to the government). In exchange, they’ll have to write down the loan by at least 10% and to 96.5% of the home’s property value. Many of these properties also have second-lien mortgages, or “piggybacks,” behind the first, and the administration will try to offer enough of a cash payment to banks to have them reduce those loans so borrowers can refinance. (Here’s an on the new enhancements.) If this program sounds familiar, well, it is. Two years ago, Congress created a “Hope for Homeowners” program designed to allow mortgage-backed securities investors to refinance loans into the FHA. The program’s many restrictions...
  • 11:37 AM » Ambac Regulator Takes Over to Avoid Asset ‘Scramble’ (Update1)
    Published Fri, Mar 26 2010 11:37 AM by Business Week
    Ambac Financial Group Inc.’s regulator said he seized $35 billion in risky mortgage insurance to keep the company afloat and forestall an “uncontrollable scramble for assets” among policyholders and counterparties.
    Click Here to Read the Full Article

    Source: Business Week
  • Thu, Mar 25 2010
  • 6:34 PM » Overview 2009: Income, Population, Jobs and Home Prices by State
    Published Thu, Mar 25 2010 6:34 PM by WSJ
    Things were bad all over the U.S. in 2009, but some areas got hit harder than others. Overall U.S. per capita income dropped 2.6% to about $31,000. Connecticut, home to many of the titans of finance, continued to be the state with the highest per capita income in the nation at $54,000, but it was in the top 10 in terms of declines from 2008 with a 3.3% drop. Wyoming had the largest personal income drop in the country at 5.9%. Only four states posted gains in per capita personal income with West Virginia coming out on top with a 1.8% increase, though it has seventh lowest level in the nation. Every state experienced a decline in employment last year. Unsurprisingly, California, the most populous state, lost the most jobs, but its average unemployment rate of 11.4%, fourth highest in the nation, showed that the decline was disproportionate compared to other states. North Dakota, the nation’s third least populous state, had the smallest drop in jobs, but it also had the lowest average unemployment rate. Home prices, as measured by Federal Housing Finance Agency which only tracks mortgages backed by Fannie Mae and Freddie Mac, posted large declines in bubble areas such as Nevada, Arizona and Florida. But 18 states posted year-to-year gains, according to FHFA whose index may understate declines since it doesn’t track jumbo or subprime loans. 2009 Overview State Income (per capita) Change in income 2008 to 2009 Population (July 2009) Change# in pop. 2008 to 2009 Jobs lost 2008 to 2009 Average jobless rate Home prices 2008 to 2009 *United States $39,138 -2.6% 307,006,550 0.9% -5,961,600 9.3% -1.2% Alabama $33,096 -1.7% 4,708,708 0.7% -98,300 10.1% 2.1% Alaska $42,603 -3.0% 698,473 1.5% -2,800 8.0% -2.8% Arizona $32,935 -4.1% 6,595,778 1.5% -148,200 9.1% -13% Arkansas $31,946 -1.0% 2,889,450 0.8% -39,000 7.3% 1.5% California $42,325 -3.5% 36,961,664 1.0% -917,800 11.4% -0.4% Colorado $41,344 -3.9% 5,024,748 1.8% -116,300 7.7% 2.8% Conn. $54,397 -3.3% 3,518,288 0.4% -65,800 8...
  • 6:34 PM » Cash Dwindling For No-Money Down Home Loan Program
    Published Thu, Mar 25 2010 6:34 PM by Google News
    LGI Homes A house for sale at Canyon Crossing, priced around $145,900. At the Canyon Crossing community in southwest San Antonio, buyers can still get into a $135,000 four-bedroom home for no money down. It’s possible thanks to a program from the Department of Agriculture’s rural development division, which offers no-money-down loans in certain parts of the country for low- and middle-income borrowers. The Single-Family Housing Guaranteed Loan Program is likely to run out of funding next month, just as a surge of buyers are expected to ink deals before the federal tax-credit expires April 30. Originally crafted to encourage home buying in rural areas, it’s become in some exurbs that have seen rapid development in recent years. Some developers have even created entire communities catering to USDA-backed borrowers. Builders are worried what happens when the program exhausts its fiscal-year funding. Last month, all of Canyon Crossing’s 13 closings came from buyers tapping the USDA program, said Eric Lipar, chief executive of Texas-based LGI Homes. “It’s going to have a substantial impact on sales,” he said. The company has an entire section of its Web site dedicated to “No Money Down,” but said that it won’t tout the deals after April 1. The housing downturn has fueled the program’s popularity in recent years. Pre-crash, the USDA typically issued $3 billion in loans for each fiscal year ending Sept. 30, said Jay Fletcher, an agency spokesman. That number has more than quadrupled. Once lenders, fearing more foreclosures, stopped offering zero-down deals, buyers have flocked to the USDA guaranteed-loan program created in 1991. Lenders consider the loans a safe bet because the USDA guarantees a percentage of the principal amount, up to 90%, meaning they’ll pay should the borrower default. Last fiscal year’s foreclosure rate on USDA loans was 1.72%, far below the Federal Housing Administration’s 3.32%, Fletcher said. Borrowers also can’t make more than 115% of a county’s median...
  • 6:34 PM » How Long Will Negative Equity Last?
    Published Thu, Mar 25 2010 6:34 PM by Seeking Alpha
    submits: First American CoreLogic tries to answer the question for ten housing markets with the following chart ( click to enlarge ):
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 6:33 PM » Obama administration to order lenders to cut mortgage payments for jobless
    Published Thu, Mar 25 2010 6:33 PM by Washington Post
    The Obama administration plans to overhaul how it's tackling the foreclosure crisis, in part by requiring lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed, senior officials said Thursday.
    Click Here to Read the Full Article

    Source: Washington Post
  • 3:09 PM » 3/25/10--Principal Forgiveness, Ambac
    Published Thu, Mar 25 2010 3:09 PM by
    *Obviously the top mortgage story yesterday was the Bank of America announcement of their plan for principal forgiveness. 12th Street's own John Kohler shares some thoughts on this topic (see below). All in all we aren't sure that in and of itself this is going to have a huge impact, however to the extent this starts a trend amongst the industry it could have a snowballing effect.
    Click Here to Read the Full Article

  • 3:09 PM » Servicer: "You HAFA to be kidding"
    Published Thu, Mar 25 2010 3:09 PM by Calculated Risk Blog
    IMPORTANT note from CR : The following is from long time reader Shnaps (the views are his). Shnaps has been working in the mortgage industry in various capacities "since people were extending the antennas on their mobile phones". Shnaps currently serves in a key role related to HAMP at one of the largest non-prime mortgage servicers in the Nation. Shnaps offered to write a couple of posts from the viewpoint of a servicer. Several readers reacted negatively to Shnaps . Shnaps writes: "Most HAMP applicants ARE hurting, no doubt. But that shouldn't justfy a free pass for the minority of applicants who are just trying to take advantage. That was the point of the post." You HAFA to be kidding One might suppose that after the abject failure that HAMP has proven to be at modifying mortgages for ’millions’ of struggling homeowners, the US Treasury might have learned something before rolling out ‘HAFA’. This scheme was briefly known, in its conceptual stage, as FAP(!) - short for ‘Foreclosure Avoidance Program’. It eventually was redubbed HAFA - which is short for ‘Home Affordable Foreclosure Alternatives’. Whatever they call it, the program’s purported goal is to help (millions?) of Americans avoid the horror of foreclosure via the slightly-less -awful ‘deed-in-lieu’ alternative. For those just tuning in and asking “What is a ‘deed-in-lieu’?” - allow me to explain. This term is used to describe a situation in which a mortgagor voluntarily turns over the deed to the mortgaged property to the mortgagee ‘in lieu’ of a foreclosure. It’s different than the mortgagee taking ownership via foreclosure in two key ways: first, in the sense that it is ‘voluntary’, and also in that a deed transferred in this manner would come subject to any other liens. So for this to happen, realistically – there better not be any other liens. The other option HAFA incentivizes is similar – the so-called ‘short-sale’, which basically amounts to the borrower doing the bank’s customary...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:09 PM » Don’t Be Shocked by Jobs Boom Next Week
    Published Thu, Mar 25 2010 3:09 PM by WSJ
    Investors should start readying themselves for some strong gains in the labor market. Why? It’s because both data and anecdotal evidence point in that direction, at least for a while. “We are going to be hiring this year,” said Joe Brusuelas , of Stanford-based economic research firm Brusuelas Analytics . He pegs the likely gain in payrolls at around 225,000 for March, up from a loss of 36,000 in February. Here’s the evidence: In the first place, the government has started hiring large numbers of temporary workers for the census. That number should peak at around 635,000 in May, according to the Commerce Department. The jobs will be temporary, but they are still jobs and that will likely mean increased spending in the economy and hence likely more hiring. Even without the census-related boost, Brusuelas said the private sector should add about 50,000 permanent jobs a month if the economy stays on its current trend. That trend-growth rate should edge higher towards the end of the year, with even more jobs being added each month, he said. Add to that further evidence hidden deep with other data series. Even though the Institute for Supply Management ’s Manufacturing Index, which tracks growth in the factory sector, slowed in February, the sub-index for employment was more bullish, showing three months of steady increases. The employment sub-index within ISM’s Services Index, which tracks the non-manufacturing economy, also showed consistent gains over the same period. The two ISM data points augur improved hiring going forward. Anecdotally, I’ve seen evidence of a more vibrant job market. Here in New York City, there has been a dramatic decline in service quality at some of the local lunch spots. That is typically a sign that it’s becoming harder for companies either to get quality workers and/or appropriately trained managers. In addition, not only are there now help-wanted signs in store fronts, but there is also some rather frenetic activity among headhunters. Both...
  • 3:09 PM » Bernanke: Fed Likely to Sell Some of Its Mortgages Eventually
    Published Thu, Mar 25 2010 3:09 PM by WSJ
    Federal Reserve Chairman Ben Bernanke carves out new ground in his today, saying the Fed is likely to start at some point gradually to sell some of its large holdings of mortgage backed securities. Federal Reserve Chairman Ben Bernanke (Reuters) His goal, he says, is to get his $2 trillion balance sheet down to below $1 trillion. One way to do that is to sell mortgage-backed securities. This matters a lot for millions of Americans because if the Fed sells pieces of its trillion-dollar mortgage portfolio, it could put upward pressure on mortgage rates. “I anticipate that at some point, we will have a gradual sales process,” Mr. Bernanke said in response to questions by lawmakers. The timing of these sales is a wildcard. In February, Mr. Bernanke said, “I currently do not anticipate that the Federal Reserve will sell any of its security holdings in the near term, at least until after policy tightening has gotten under way and the economy is clearly in a sustainable recovery.” In today’s testimony he says: “The sequencing of steps and the combination of tools that the Federal Reserve uses as it exits from its currently very accommodative policy stance will depend on economic and financial developments and on our best judgments about how to meet the Federal Reserve’s dual mandate of maximum employment and price stability.” In other words, he’s now not ruling out sales of mortgage-backed securities in the short-run. And he’s not saying it will only happen after the Fed starts raising interest rates, as he has said before. This doesn’t mean the Fed is planning to sell down its mortgage backed securities right away. Instead it means it is a live debate within the Fed’s Federal Open Market Committee . Mr. Bernanke also offered some optimism about the health of the mortgage market as the Fed winds down its mortgage purchases. “We do believe that mortgage markets are performing better,” he said, adding that there’s been “very little negative reaction” in markets to the Fed’s plan...
  • 2:54 PM » Appraisal Organizations Continue to Oppose BPO “Short Sales” - Appraiser News Online
    Published Thu, Mar 25 2010 2:54 PM by Google News
    In a March 24 letter to Treasury Secretary Timothy Geithner, the Appraisal Institute continued voicing opposition to the Obama Administration’s endorsement of broker price opinions in determining the minimum offer in “short sales” of homes. The letter, in regard to...
  • 2:54 PM » Goldman’s outperforming mortgage CDOs
    Published Thu, Mar 25 2010 2:54 PM by Reuters
    I’m a bit late to this, but had an interesting post this weekend about the now-famous Harvard thesis upon which Michael Lewis based a lot of his latest , and whether it partially exonerates Goldman Sachs from the charge of deliberately building CDOs which were designed to go bad, to the profit of Goldman Sachs. Gandel gets comments from both Janet Tavakoli, who will never admit that Goldman is anything but pure evil, and from AK Barnett-Hart, the author of the thesis, who keeps a certain amount of scholarly caution while agreeing that Gandel basically read the thesis correctly. Here’s what he found: One thing Barnett-Hart examines is how the CDOs of different investment banks performed. Turns out Goldman wasn’t the worst CDO underwriter after all. Quite the opposite. Barnett-Hart looked at CDO deals underwritten by investment banks from 2002 to 2007, and found that out of about 700, Goldman’s CDOs performed better than every other major underwriter of the investment product on the street. Through the end of 2008, just 10% of the bonds that Goldman packed into its CDOs had gone bad. J.P. Morgan’s rate of default was about four times that, making it the worst U.S. investment bank in the CDO game. But plenty of others had similarly bad numbers. Merrill and Bear came in at a default rate of about 35%, and Citigroup posted a similarly depressing 30%. Barnett-Hart goes on to praise Goldman’s CDO underwriting prowess. Of course, the likes of Merrill, Bear, and Citigroup never went short mortgages, so they can’t possibly be accused of deliberately constructing highly-toxic CDOs in the knowledge that those CDOs would end up defaulting. It’s hard to be evil when you’re fundamentally incompetent. But as the Lewis book shows, it was really Deutsche, not Goldman, which was most cognisant of the coming subprime collapse. And Goldman’s decision to go short came really rather late in the game. Lewis is a storyteller, not a historian, so when it comes to finding evil intent at investment...
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